5 Ways to Know a Stock Is Headed Up

Learn to spot these bullish chart patterns -- they never lie

Rounded Bottom

Rounded bottoms are elongated and U-shaped, and are sometimes referred to as rounding turns, bowls or saucers. The price pattern forms a gradual bowl shape, and there should be an obvious bottom to that bowl. While price can fluctuate or be linear, the overall curve should be smooth and regular, without obvious spikes. The pattern is confirmed when the price breaks out above its moving average.

A rounded bottom forms as investor sentiment shifts gradually from bearishness to bullishness. As the sentiment turns down toward the bottom, there is a drop off in trading volume due to the indecisiveness in the market. There is a period of consolidation at the bottom (this must be present to consider it a true rounded bottom) as trading bounces within a certain range. Then, finally, there is a gradual upturn marking the shift to bullishness. As investors become more decisive about the bullishness, there is an increase in trading volume.